SOUTH Coast motorists are "not far away" from seeing the long-term benefits of the latest upgrade of the Princes Highway, NSW Premier Mike Baird has said.

Fulton Hogan, the company building stage one of the Princes Highway upgrade, has also received the nod for stage two.

During an inspection of the work taking place on the $329 million upgrade of the Highway in Gerringong on Wednesday, the Premier also re-announced contract details of the next stage.

Stage two is the Foxground and Berry bypass.

The $580 million contract was awarded to Fulton Hogan in March.

The project will provide a four-lane divided highway separated by a median for 11.6 kilometres between Toolijooa Road and Schofields Lane.

Mr Baird also revealed a 13 per cent cost increase for the project during last week's visit, issuing a press release indicating the road would cost $580 million instead of the previously estimated $510 million.

A Roads and Maritime Services spokeswoman told Fairfax Media the cost of Foxground and Berry bypass has jumped $70 million in the past two years because of "inflation and other costs".

Kiama MP Gareth Ward said the $70 million difference was not a cost blowout.

He also posted on Twitter that, "we went to tender and that's the market price".

"The RMS estimates what they think it will be worth," he said.

"You don't know the true cost until you go to tender, you select the most cost-effective tender. We had an estimate, not a real figure.

"That is more than we had anticipated, but that doesn't mean we're not going to build it.

"I'm going to get on with making sure the money is in the budget to deliver it."

The upgrade includes a bypass of the existing winding highway at Foxground and a bypass of Berry, with interchanges provided for access from the north and south of Berry.

"It is not far away before the real long-term benefits are going to be seen, as this project comes to completion," Mr Baird said of stage one.

"And importantly, there is more to come; which is why today I'm also delighted to announce that the next stage, the Foxground to Berry bypass, of the contract has been awarded."

Mr Ward said the Berry to Foxground section will start later this year and be completed by 2018.

He also praised the progress of stage one.

"Actions speak louder than words," he said. "As the Premier's just announced, the contract has been awarded to Fulton Hogan for a $580 million project, the largest ever single investment in the history of the Princes Highway."

The Premier also said such works "couldn't have happened, wouldn't have been funded" if not for the long-term lease of Port Kembla.